How a 33-year-old Made $1 Million in 92 Days
Source: MSN Career, LDSMan, Trevor Chapman
Thirteen
years ago as a broke college student, Trevor Chapman took a job selling
pest control door-to-door to make extra money. Eventually he launched
his own sales operation — a solar panel installation company that
quickly expanded across three states. But two years in, something was
missing — and it wasn't a shortage of time spent in the office.
"There
came a point in time when I had to say, 'I'm in my mid-thirties, am I
willing to wait until some of my kids are out of the house … to enjoy
time freedom ... [to enjoy] my life to the extent I imagined I would?'"
Chapman recalls.
His answer became the impetus to spend $200 (£155) launching LDSman.com, an online store offering a strange assortment of items sourced from China (Kevlar pants, charcoal toothpaste, inflatable lounge chairs, fidget spinners and more).
Within three
months, Chapman went from putting in 12-hour days at his solar company
to spending just an hour-and-a-half a week on his site by the time he
hit his first $1 million (£770k) in sales.
The experience
convinced Chapman e-commerce offers the best opportunity for anyone to
take control of their time and make money, even for the inexperienced
just looking to start something, like he was.
"This summer,
[my family and I] are taking three months on the road," says Chapman.
It's something he's always wanted to do, but never could before. "I was
shackled to earning a dollar," he says.
How it all started
Unhappy
running his solar panel business and seeing no path to change there,
Chapman came across a quote from Warren Buffett: "If you don't find a
way to make money while you sleep, you will work until you die."
Chapman
figured the best way to earn passive income would be through
e-commerce. It's big business: Global online retail sales grew by 20
percent from $1.9 trillion to $2.3 trillion in 2015, according to a 2016
Ecommerce Foundation report.
But before he gave any real thought
to leaving day job, he wanted to see for himself if it was possible to
make a living selling things online. "It requires work like everything
else, but you don't have to risk your full time job to do this," the
33-year-old says.
Chapman spent a few hours a night on the
project and startup costs were minimal. He bought adomain name for $2.99
a year and set up a Shopify account via a $14 trial. The most expensive
thing was his $100-a-day Facebook advertising budget. LDSman.com went
live on November 11, 2016.
Day one, Chapman lost money.
At
first, he was selling the wrong product. "My initial thing was that I
was going to sell Mormon artwork online. That was probably up for 10
hours," he says. "I realized that what I was peddling online was not
compelling enough to drive traffic."
To refocus, Chapman used a
lesson from his solar panel operation: When selling door-to-door, the
product has to be intriguing enough for people to invite you into their
homes, Chapman says. "Same thing online — to pull someone away from
their friend feed, you've got to be offering something interesting."
Out
went Mormon art and in came inflatable lounge chairs, a popular staple
among online stores selling viral products. Sourcing from Chinese
manufacturers on Alibaba and Aliexpress, Chapman found other products
for $4.99 that he could re-sell for $59.99. To avoid the cost and risk
of taking on inventory, he would set up arrangements with suppliers
(over the popular Chinese messaging service WeChat) to have his orders
shipped directly from their warehouses in China to the customer in the
U.S. — a practice known as drop shipping.
"That's the best way to test a product to see whether or not it's actually going to sell," he says.
And drop shipping had other benefits: Through a program called ePacket, an arrangement between the United States Postal Service and foreign postal operators designed to encourage e-commerce, it was actually cheaper for LDSman to ship from China, albeit with a slight lag time.
Shipping
an external iPhone zoom lens from Shanghai, for example, cost $2.29 –
more than $5 cheaper than the cost to ship the same package
domestically.
Making money while he slept
As
orders streamed in while Chapman slept, he realized he was on to
something. "I made money my second day and every day after that," he
says. Just two weeks in, he had his first $10,000 day.
The
revenue allowed Chapman to hire out time-consuming customer service work
to a team of freelancers in the Philippines. Chapman says he pays each
team member $700 a month (low by U.S. standards but notably higher than
the $400 monthly average a family in the Philippines earns). He also
boosted his budget for Facebook advertisements, focusing more money on
the ads that attracted the most purchases.
Nearly two months in, the woes of drop shipping caught up with him. The vendor in China he paid $80,000 to supply and ship inflatable lounges swapped out the approved product for a cheaper alternative. When customers started complaining, LDSman replaced about 1,500 bags. Even so, Chapman says he's bounced back from the experience to reach a 48 percent total pre-tax profit margin.
Like
any good business person, Chapman also turned the setback into an
opportunity: He bought a 9,000-square-foot warehouse in Salt Lake City
and hired a five-person fulfillment staff. It's a move that enabled
LDSman to take the business to the next level but something Chapman
concedes isn't for everyone, given the capital investment and
commitment. Chapman quit the solar panel business and with the warehouse
and staff in place, was spending a total of just over an hour a week
working on the site and updating Facebook ads.
Shortly after day
92, when the site brought in that first $1 million in sales, Utah-based
VC firm Clarke Capital came calling, interested in adding Chapman's
e-commerce company to its portfolio. Chapman says he turned down a
buyout offer in the ballpark of $3 million to maintain independence and
to have the income and time pursue his own projects.
For
now, that includes overseeing LDSman and the site's $350,000 in monthly
sales. Chapman says he just recently topped $2 million in total sales
in his sixth month of operating. He's alsoteaching an online e-commerce
course. (While a few of the people in his online course have come close
to replicating his initial success, the most common sales total at the
one month mark is under $12,000. "As with anything," Chapman says, "you
get out of it what you put in.")
Inspired by his experience
dealing with products sourced from China, Chapman is also co-managing a
new start-up: with his brother-in-law, Chapman launched a shipping
logistics company last year that uses free space on commuter flights,
mostly those of Delta Airlines, to ship from Asia to the U.S. for less
than bulk shippers. Its latest customer? Another online retailer called
Amazon. The business is on track to do $10 million in its first year. As
with his old business, the workload is largely outsourced to a team.
It's
a full-circle finish that Chapman sees as a sign of just how
revolutionary the opportunities provided by a globalized and digital
economy actually are.
"The data on each individual is
astounding," he says about the information he can cull from advertising
on Facebook. Before, this kind of consumer targeting would have cost
hundreds of millions of dollars, says Chapman. "[O]nly companies like
Target could engage in this kind of marketing," he says in reference to
Target's controversial marketing tactics which targeted expecting
mothers with baby product ads based on their changing purchase habits,
even before some were aware they were pregnant.
Now, "In a month you can be more powerful than Target ... and you can do that online," says Chapman. "That's the power of e-commerce."
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